Caterpillar to cut thousands of jobs, close plants
Sep 28 2015
Manufacturing giant Caterpillar taking an unprecedented step Thursday, cutting jobs and costs, closing facilities, and overhauling several business sectors. The job cuts are part of a corporate restructuring that Caterpillar hopes it will help lower its operating costs by roughly $1.5 billion a year once implemented.
For 2015, the company expects revenues of $48 billion, down by $1 billion from a prior view and below the $48.9 billion consensus. Caterpillar brought in brought in $55.18 billion in revenue previous year.
Chief executive officer at Caterpillar, Doug Oberhelman said the company is going through challenging marketplace environment in core regions and industry segments i.e. mining and energy.
The stock has lost 29 percent this year, which would be the biggest annual slump since 2008. Today, we lowered this year's outlook by another billion dollars, and we're expecting for it to be even lower next year. Caterpillar said it would update its 2015 profit forecast when it released third-quarter results late next month.
The restructuring could impact more than 20 plants around the world across its three large businesses - construction, resources, and energy and transportation, the company said.
The company has been hurt, in particular, by a slowdown in China's construction boom.
Caterpillar, the world's largest construction and mining equipment maker, has already reduced its workforce by more than 31,000 since mid-2012.
The company added that sales and its revenue during 2016 would be 5% lower than in 2015.
While Cat made announcements earlier this year of layoffs in places like East Peoria and Joliet, Potts said the job cuts they're announcing now are permanent. As an example, it said mining equipment sales were far below their peak and were substantially below what Cat would consider a reasonable replacement level. If that happens again in 2016, it would be the first time in the company's 90-year history that sales and revenues dropped for four consecutive years. Plans to develop a new headquarters are delayed indefinitely.
The Peoria, Ill.-based company said the job cuts would occur through a reduction in its salaried and management staff and, longer term, through contemplated plant consolidations and closures. Since mid-2012, Caterpillar has slashed its entire workforce by more than 31,000, and after 2013, has either closed or announced plans to close over 20 facilities, resulting in 8 million square feet of manufacturing lost.